Accrual – Provision of premiums and discounts on directly related exchange transactions for depositing swap (interest arbitration) deals in each transaction period.
Adjustment – Official action either by payment imbalances or by changes in internal economic policies to improve the official currency rate. Adjustment – Official action either by payment imbalances or by changes in internal economic policies to improve the official currency rate.
Appreciation – When price rises in response to market demand, the currency is called ‘action appreciation’.
Arbitrage- The purchase or sale of an instrument as well as moving it in an equal and opposite position in the respective market. So as to take advantage of the small price differential between the markets.
Ask (offer) price – The price at which the market is prepared to sell a specific currency in a foreign currency contract or cross currency contract. At this price the trader can buy the base currency, in the quote. It is shown on the right side of the quote. For example, in the quote USD/CHF 1.4527/32. The asking price is 1.4532. This means you can buy one US dollar for 1.4532. Swiss francs.
At Best – An instruction given to a dealer to buy or sell. At the best rate that can be obtained.
At or better – an order to settle at a specific rate or better.
Balance of trade – the value of a country’s exports reduces its imports.
Bar Chart – A type of chart consisting of four important points: the high and low values, which form the vertical bar, the starting price, which is marked with a slight horizontal line to the left of the bar, and the closing value, which is the bar The right side is marked with a horizontal line.
Base Currency – The first currency in currency pair, it shows how much the base currency is valued against another currency. For example, if the rate of USD / CHF is equal to 1.6215. Then the value of one USD is equal to 1.6215 in FX markets. The US dollar is usually considered the ‘base’ currency for quotes. It meaning that the quote $ 1 USD per unit. Other currency quoted in pairs. The primary exceptions to this rule are the British pound, euro, and Australian dollar
Bear market – A market distinguished by falling prices.
Bid Price – Bid means the price, at which the market is prepared to buy a specific currency in a foreign currency contract or cross currency contract. At this price, the trader can sell the base currency. This is shown on the left side of the quote. For example, the quote has USD / CHF 1.4527 / 32. The bid price 1.4527. Meaning you can sell one US dollar for 1.4527 Swiss francs.
Bid / Ask spread – The difference between the bid and the offer price.
Big Figure Quote – Dealer expression referring to the first few digits of the exchange rate. These digits are often omitted in dealer quotes. For example, a USD / JPY rate maybe 117.30 / 117.35, but will be quoted verbally without the first three digits ie «30/35».
Book – In a professional business environment, an In book is a summary of the total positions of a trader or desk.
Broker – A person or firm acting as an intermediary, holding buyers and sellers together for a fee or commission. In contrast, a contrast dealer applies capital and takes a side of the position, In subsequent trade with another party one is expected to earn a spread (profit) by closing the position.
The 1944 Bretton Woods Agreement – An agreement that established fixed foreign exchange rates for major currencies. Provided for the central bank’s intervention in the currency markets. And pegged the price of gold at US $ 35 per ounce. The agreement lasted until 1971. When President Nixon overturned the Bretton Woods Agreement and established a floating exchange rate for major currencies.
Bull Market – A market distinct from rising prices.
Bundesbank – Central Bank of Germany.
Cable – Merchant jargon referring to the Sterling / US Dollar exchange rate. Called so because the rate was originally transmitted via a transatlantic cable starting in the mid-1800s.
Candlestick Chart – A chart that indicates the trading range for the day as well as the opening and closing prices. If the open price is greater than the close price, the rectangle between the open and close price is shaded. If the nearest price is higher than the open price, that area of the chart is not shaded.
Cash Market – The market in real financial instruments upon which a futures or options contract is based.
Central Bank – A government or quasi-governmental organization that manages the monetary policy of a country. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundes Bank.
Chartist – A person who uses charts and graphs and interprets historical data to find trends and predict future movements. Also known as technical trader.
Clear Funds – Funds that are freely available are sent to settle a trade.
Closed position – Exposure in foreign currencies that no longer exist. The process of closing a position is to sell or buy a certain amount of currency to offset a similar amount of the open position. This condition will be ‘square’.
Clearing – The process of settling a business.
Differences – the tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high instability in their domestic currency, the rupiah. From there, contagion spread to other Asian emerging currencies, and then to Latin America, and is now known as the ‘Asian Contagion’.
Collateral – As a way to secure some debt or guarantee performance.
Commission – A transaction fee charged by a broker.
Confirmation – A document exchanged by counterparts for a transaction that states the terms of the said transaction.
Contract – Standard unit of trading.
Counters Currency – The second listed currency in a currency pair.
Counterparty – One of the participants in a financial transaction.
Country Risk – Risk associated with cross-border transactions, including but not limited to legal and political circumstances.
Cross Currency Pair or Cross Rate – A foreign currency transaction in which one foreign currency is traded against another foreign currency. for example; Euro / GBP.
AUD – Australian Dollar
Cad – Canadian Dollar
EUR – Euro
JPY – Japanese Yen
GBP – British Pound
CHF – Swiss Franc
USD – US Dollar
Currency – Any form of money issued by the government or central bank and used as a basis for legal tender and trade
Currency pair – two currencies that form a foreign exchange rate. For example, EUR / USD
Currency risk – the possibility of adverse changes in exchange rates.
Day Trader – Speculators who take positions in a currency which then become liquid before the close of the same trading day.
Dealer – A person or firm that acts as a principal or equivalent for a transaction. The headmaster takes one side of a position, hoping to earn a spread (profit) by closing the position in subsequent trade with another party. In contrast, a broker is an individual or firm that acts as an intermediary, holding buyers and sellers together for a fee or commission.
Shortage – negative balance of trade or payment.
Delivery – An FX trade where both parties make and take the actual delivery of traded currencies.
Depreciation – The fall in the value of a currency due to market forces.
Derivative – A contract that changes the price in relation to the price movements of a related or underlying security, future or another physical instrument. An option is the most common derivative instrument.
Devaluation – The deliberate downward adjustment of the price of a currency, usually by official announcement.
Economic Indicators – A government released a statistic indicating current economic growth and stability. Common indicators include employment rate, gross domestic product (GDP), inflation, retail sales, etc.
Expiry Day Order (EOD) – An order to buy or sell at a specified price. The order is open until the end of the trading day which is typically 5 PM ET.
European Currency Union (EMU) – The main goal of the EMU is to establish a single European currency called the euro, which in 2002 will officially replace the national currencies of EU member states. January 1, 1999 began the transitional phase to introduce the euro. The euro now exists in the form of banking currency and paper financial transactions and foreign currency is created in the euro. This transition period will last for three years, at which time the euro note will come into circulation.
On July 1, 2002, only the euro would be a legal tender for EMU participants, with the national currencies of member countries ceasing to exist. The current members of EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, Netherlands, Italy, Greece, Spain and, Portugal.
Euro – Currency of the European Currency Union (EMU). A replacement for the European Currency Unit (ECU).
European Central Bank (ECB) – Central Bank for the new European Monetary Union.
Federal Deposit Insurance Corporation (FDIC) – is the regulatory agency responsible for the operation of bank depository insurance in the US.
Federal Reserve (Fed) – Central Bank for the United States.
First-in first-out (FIFO) – Open positions are closed according to FIFO accounting rules. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.
Flat/square – Dealer jargon is used to describe a situation that has been completely reversed, e.g. You bought $ 500,000, then sold $ 500,000, creating a neutral position.
Foreign Exchange – (Foreign Currency, FX) – Simultaneous purchase of one currency and sale of another.
Forward – The pre-specified exchange rate for certain foreign currency contracts, at some agreed future date, based on the interest rate differential between the two currencies.
Forward Points – Pips added or subtracted from the current exchange rate to calculate the forward price.
Fundamental analysis – An analysis of economic and political information aimed at determining future movements in a financial market.
Futures contract – the obligation to exchange a good or instrument at a set price at a future date. The primary difference between futures and forwards is that futures are generally considered an exchange (exchange-traded contracts – ETC), versus forwards, which is considered an over the counter (OTC) contract. An OTC is any contract not traded on an exchange.
FX – Foreign Exchange.
G7 – Seven major industrial countries, America, Germany, Japan, France, Britain, Canada, Italy.
Go Long – Purchase of stock, commodity, or currency for investment or speculation.
Go shorting – the sale of a currency or instrument not owned by the seller
Gross Domestic Product – The total value of production, income or expenditure of a country produced within the physical boundaries of the country.
Gross National Product – GDP and income earned from investment or work abroad.
Good An Mole Canceled Order (GTC) – An order to buy or sell at a specified price. This order remains open until the customer is canceled.
Hedge – The position or combination of positions that reduces the risk of your primary position.
«Hit the bid» – Acceptance to buy or sell on offer.
Inflation – An economic situation whereby the prices of consumer goods rise, eroding purchasing power.
Initial margin – The initial deposit of collateral is required to enter a position as a guarantee of future performance.
Interbank Rates – Foreign exchange rates at which large international banks quote other large international banks.
Intervention – Action by a central bank to influence the value of its currency by entering the market. Several interventions to control exchange rates refer to actions by central banks.
Kiwi – Slang for New Zealand Dollar.
Leading Indicator – Statistics that are supposed to predict future economic activity.
Leverage – also known as margin. The ratio of the amount used in a transaction to the required security deposit.
LIBOR – London Inter-Bank offered the rate. Banks use LIBOR when borrowing from another bank.
Limit Order – An order with a restriction on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD / YEN is 117.00 / 05, then a limit order to buy USD will be priced below 102 (ie 116.50)
Liquidation – The closing of an existing position through the execution of an offset transaction.
Liquidity – The ability of a market to accept large transactions with no effect on price stability.
Long position – A condition that appreciates in value if market prices rise. When the base currency is purchased in a pair, the position becomes longer.
Lot – A unit for measuring the transaction amount. The value of a transaction always matches a number of integers.
Margin – The required equity that an investor must accumulate to collateralize a position.
Margin call – A request from a broker or dealer for additional funds or other collateral to guarantee performance on the situation being transferred against the customer.
Market Maker – A dealer who regularly bids and asks for prices and is ready to create a two-way market for any financial instrument.
Market Risk – Exposure to changes in market prices.
Mark-to-market – The process of re-evaluating all open positions with current market prices. These new values then determine the margin requirements.
Maturity – The date of disposal or termination of the financial instrument.
Net Position – The amount of currency purchased or sold that has not yet been offset by the opposite transaction.
Offer (ask) – the rate at which a dealer is willing to sell a currency. Ask (offer) See Price
Offset Transaction – A trade with which an open position acts to cancel or offset some or all of the market risk
A Cancel The Other Order (OCO) – A designation for two orders under which one part of two orders is executed and the other is automatically canceled.
Open Order – An order that the market then moves to a specified price. Generally, Good Cancel Till is associated with canceled orders.
Open Position – An active trade with the corresponding unreserved P&L, which is not offset by an equal and opposite deal.
Over the counter (OTC) – used to describe any transaction that is not conducted on an exchange.
Overnight position – A trade that is open until the next business day.
Order – The instruction to execute a trade at a specified rate.
Pips – The smallest unit of price for any foreign currency. Numbers added or subtracted from the fourth decimal place, ie 0.0001. Also called points.
Political Risk – The risk of change in government policy that will adversely affect the position of an investor.
Status – The net total holdings of a given currency.
Premium – In money markets, refers to the amount by which the futures or futures price exceeds the spot price.
Price Transparency – Describes quotes to which every market participant has equal access.
Profit / Loss or «P / L» or Profit / Loss – actual «realized» profit or loss as a result of trading activities on closed positions, as well as theoretical «unrealized» profit or loss on open positions that have been mark-to-market.
Quote – A nominal market value, usually used for information purposes only.
Rally – Price recovery after a period of decline.
Range – The difference between the future highest and lowest price recorded during a given trading session
Rate – The price of one currency in reference to another, usually used for purposes.
Resistance – The term used in technical analysis indicates a specific price level at which the analysis concludes that people will sell.
Revaluation – An increase in the exchange rate for currency as a result of the intervention of the central bank. Resist devaluation.
Risk – exposure to uncertain change, often used with a negative connotation of adverse change.
Risk management – the employment of financial analysis and trading techniques to reduce and/or control the risk of various types of risk.
Roll-over – The process by which the settlement of a transaction is carry forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.
Round trip – Purchase and sale of a specified amount of currency.
Settlement – The process by which a trade is entere into the books and records of counterparts for a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.
Short position – An investment condition that benefits from a drop in market value. When the base currency is sold in a pair, the position is called short.
Spot Price – Current Market Price. The settlement of spot transactions usually takes place within two business days.
Spread – The difference between bid and offer prices.
Square – The purchase and sale are in equilibrium and thus the dealer has no open position.
Sterling – Slang for the British Pound.
Stop Loss Order – The order type whereby an open position is automatically liquefied in a specific situation. If the market moves against the position of an investor, it is often use to reduce the risk of loss. As an example, if an investor has a long USD at 156.27, they can put in a stop-loss order for 155.49, which can reduce losses, which can reduce the depreciation of the dollar, possibly 155.49 Down from?
Support Level – The technique used in technical analysis indicates a specific price ceiling and floor at which a given exchange rate will automatically correct. Unlike resistance.
Swap – A currency exchange is the sale and purchase of the same amount of the same currency at the same exchange rate.
Swissy – Market slogan for Swiss Franc.
Technical analysis – An attempt to forecast prices by analyzing market data, ie historical price trends and, averages, volumes, open interest, etc.
Tick - A minimal change in price, up or down.
Tomorrow Next (Tom / Next) – Purchase and sale of a currency for next day delivery.
Transaction Cost – The cost of buying or selling a financial instrument.
Transaction Date – The date on which a trade occurs.
Turnover – The total money value of all executed transactions in a given time period; Quantity.
Two-Way Price – When both the bid and the offer rate are quote for a bid transaction.
Unrealized Profit / Loss – The theoretical gain or loss on open positions as the value at positions valued at current market rates. Which are determine by the broker at its discretion? When the situation is close, the unorganized profit loss becomes profit/loss.
Uptick – A new price quote at a higher price than the preceding quote.
Uptick Rule – In the US, a regulation under which a security cannot be sold for as long as the last trade before the short sale is at a price lower. Than the price at which the short sale is executed.
US Prime Rate – The interest rate at which US banks will lend to their major corporate customers.
Price Date – The date on which the equivalent of a financial transaction agrees to settle their respective obligations, namely, exchange payments. For spot currency transactions, the price date is usually two business days ahead. Also known as the maturity date.
Variation Margin – A broker should request the client to deposit the required margin. The term usually refers to additional funds that must be credited as a result of adverse price movements.
Volatility Volume – A statistical measurement of market price movements over time
Whipsaw – Slang for a highly volatile market situation where a sharp price movement occurs quickly after a sharp reversal.
Yard – Slang for an Arab.